M&T Bank Corporation (MTB) To Buy People’s United Financial (PBCT) In $7.6 Billion Deal

By Amit Chowdhry ● February 22, 2021
  • M&T Bank Corporation (NYSE: MTB) announced it is acquiring People’s United Financial, Inc. (NASDAQ: PBCT) in a deal valued at $7.6 billion. These are the details.

Today M&T Bank Corporation (NYSE: MTB) and People’s United Financial, Inc. (NASDAQ: PBCT) announced that they have entered into a definitive agreement under which M&T will acquire People’s United in an all-stock transaction.

The combined company is expected to create a diversified community-focused banking franchise with approximately $200 billion in assets and a network of over 1,100 branches and over 2,000 ATMs that spans 12 states from Maine to Virginia and the District of Columbia. And the combined franchise will operate across some of the most populated and attractive banking markets in the U.S. As part of the deal, People’s United’s current headquarters in Bridgeport, Connecticut will become the New England regional headquarters for M&T, further strengthening the combined company’s commitment to Connecticut and the region.

Under the terms of the deal, People’s United shareholders will receive 0.118 of a share of M&T common stock for each People’s United share they own. And following completion of the transaction, former People’s United shareholders will collectively own approximately 28% of the combined company. The implied total transaction value based on closing prices on February 19, 2021, is approximately $7.6 billion.

Why did the companies decide to merge? The merger is expected to create the leading community-focused commercial bank in the Northeast and Mid-Atlantic regions, with the scale and share to compete effectively. And the 2 companies have a complementary top-tier deposit share in core markets with a top three share in most of their respective top 10 markets. Plus the footprint of the combined company spans an economically diverse region that accounts for over 20% of the U.S. population and over 25% of U.S. GDP.

The companies have been long recognized for their community commitments and longstanding support of civic organizations. And Over the past decade M&T — through The M&T Charitable Foundation — has donated $263.7 million to over 2,800 nonprofit organizations across eight states and the District of Columbia. Plus M&T Bank has been awarded the highest possible Community Reinvestment Act rating on every examination since 1982 from the Federal Reserve Bank of New York.

The People’s United Community Foundation and People’s United Community Foundation of Eastern Massachusetts has granted $40 million to nonprofits aligned with the Foundations’ collective mission since its inception in 2007. And through the foundations, M&T will use $90 million to support charitable activities in the communities currently served by People’s United.

M&T is expecting the transaction to be immediately accretive to its tangible book value per share. And it is further expected that the transaction will be 10-12% accretive to M&T’s earnings per share in 2023, reflecting estimated annual cost synergies of approximately $330 million.

Upon closing of the deal, Jack Barnes, Kirk Walters and three other current members of the board of directors of People’s United will join M&T’s board of directors.

The merger was unanimously approved by the boards of directors of each company. The merger is expected to close in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by the shareholders of each company.

KEY QUOTES:

“In People’s United, we have found a partner with an equally long history of serving and supporting customers, businesses and communities. Combining our common legacies and our complementary footprints will strengthen our ability to serve our communities and customers, and provide solutions that make a difference in people’s lives. I am incredibly excited about this opportunity and look forward to welcoming new customers and team members to our M&T family.”

— René Jones, chairman and chief executive officer of M&T, who will lead the combined company in the same capacity

“M&T is a like-minded partner that shares our culture of supporting communities by focusing on building meaningful relationships and providing personalized products, services and local market expertise to customers, while building on our legacy of excellence in service. The merger extends our reach by providing customers access to a larger banking network and an expanded array of services. I am confident our shared community banking philosophies will provide significant long-term value for our shareholders, employees and loyal customers.”

— Jack Barnes, chairman and chief executive officer of People’s United

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.